Paramount Sets Key Date for Warner Bros. Merger: What Shareholders Need to Know!
Paramount is actively preparing for its $111 billion merger with Warner Bros. Discovery, initiating stock delisting from Nasdaq to NYSE and planning a warrant distribution to shareholders. While an antitrust settlement has been reached, the deal's closing remains uncertain and contingent on further conditions. Paramount will also incur a $7 million daily 'ticking fee' to WBD shareholders until the merger is finalized.
The proposed $111 billion merger between Paramount and Warner Bros. Discovery (WBD) is nearing its critical phase, with Paramount actively preparing for a potential closing within the coming weeks, despite acknowledging that the deal is not yet finalized. These preparations include significant changes to Paramount's stock listing and a planned distribution of warrants.
Paramount's board has decided to voluntarily withdraw the listing of its Class B common stock, currently trading as “PSKY,” from the Nasdaq Global Select Market. This delisting is expected to occur at market close on or about October 5. Following this, the company plans to transfer its Class B common stock listing to the New York Stock Exchange, with trading anticipated to commence on the NYSE at market open on or about October 6.
In anticipation of the merger, Paramount had previously announced a distribution of warrants, giving holders the option to purchase shares of Class B Common Stock on the NYSE. The record date for this distribution is set for the close of business on October 5, with the trading of these warrant-purchased shares expected to begin on October 13. Approximately 470 million warrants are projected to be issued on October 5. These warrants aim to provide eligible holders of Paramount's existing Class B Common Stock with an opportunity to purchase shares in a new entity under terms similar to those offered to the equity syndicate backing the Warner Bros. Discovery deal, including David Ellison, Larry Ellison, and Gerry Cardinale. The initial exercise price per share for these warrants will be based on the average of the daily volume-weighted average price of the Class B Common Stock over 20 trading days, concluding on the third business day prior to the WBD merger's closing. This price is subject to a maximum of $16.02 per share and a minimum of $12.00 per share. Notably, shares of Class B Common Stock held by the Paramount Global 401(k) Plan and the Paramount Global Master Trust will receive Class B Common Stock directly, rather than warrants. However, the distribution of these warrants is strictly contingent on the closing of the WBD merger, which is still subject to further conditions and uncertain ultimate timing. Consequently, Paramount reserves the right to cancel or postpone the record and/or issue dates for the warrants.
Concurrently, Warner Bros. Discovery has also announced its intention to voluntarily delist its “Euro Notes” debt securities, specifically the 4.302% senior notes due 2030 and 4.693% senior notes due 2033, from Nasdaq. WBD expects to file the necessary notification with the SEC on or around October 6.
A significant legal obstacle for the merger was recently addressed with Paramount reaching a settlement with 12 Democratic state attorneys general. If approved by the court, this settlement would resolve the antitrust lawsuit that had sought to block the deal. The proposed settlement reportedly does not require major concessions from Paramount. The judge overseeing the case is currently reviewing the settlement and has requested parties to file a response by Monday, September 28, regarding a request by Senator Cory Booker (D-N.J.) for an independent review of the proposed consent decree.
Adding to the financial implications of the ongoing process, Paramount is set to begin accruing a $7-million-per-day “ticking fee” payable to Warner Bros. Discovery shareholders, starting October 1, which will continue until the merger officially closes. This fee highlights the financial incentive to finalize the deal promptly.